Donald Trump and American Economic Growth
Written by Nick Howard
In the wake of the most recent jobs report, from April 2019, one can again see great examples of the continuing growth of the United States’ economy and the benefits to producers and consumers that the Trump Administration’s policies have reaped. Beyond political debates, there has been very steady job growth, wage growth, unemployment decline, and economic growth overall that have been consequences of the policy of this administration. I believe that this deregulatory, pro-business, pro-consumer type of policy is incredibly beneficial to the American people and it will continue to benefit them for the near future.
In a 2016 interview just hours after the presidential election results were announced, Paul Krugman, economics expert and writer for the New York Times said himself, “We are very probably looking at a global recession, with no end in sight.” Mark Cuban, a wealthy business owner, namely of the professional basketball team Dallas Mavericks, proclaimed, “In the event Donald wins, I have no doubt in my mind the market tanks.”(“Breitbart News Network.”) It is quite interesting to me how exactly sure these people can be that someone would absolutely destroy an economy by embracing the free-market. So what happened?
Well, it’s no secret they were wrong - about as wrong as one can possibly be indeed. Upon entering office, consumer confidence jumped to its highest level since 2000. GDP has grown at a steady three-plus percent rate since 2016. Unemployment for women is at its lowest since 1953; african americans record low, latino lowest ever. There have been an average 213,000 in monthly job gains over the past year. Overall the unemployment rate is at its lowest since 1969. Donald Trump took many steps in having less government regulation - cut economic regulation by 74% after his first year in office compared to the year previous(“Trump Has Set Economic Growth on Fire. Here Is How He Did It.”).
In even bigger news, the April jobs report was released this past week by the Bureau of Labor Statistics and even more growth was seen. It boasted a whopping 263,000 more jobs added along with 3.2 percent GDP growth in the first quarter of 2019. The other component of economic growth and recovery was a 3.2 percent increase in hourly earnings over the past year(“U.S. Bureau of Labor Statistics.”). Not only is GDP growing steadily, but so are wages for hard-working Americans overall. It’s important to note that if nominal wages rise, there will be less output and less GDP growth - but if there is a steady increase in wages that is not too rapid that would cause major inflation or a decrease in output, it benefits both the producer and consumer. These are, in fact, the best wage gains since the recession ended in 2009 - or in other words, we hit a trough in the business cycle in 2009 and recovery has been great recently.
Above all, Donald Trump passed incredible corporate tax-cuts that slashed the corporate tax rate in America from 35 percent, down to 21 percent. The kicker here is that businesses are able to keep a whole lot more of their profits - there was a surge in corporate profits - and produced a trickle down effect from these tax cuts that extremely benefits the consumer. If producers are able to keep more of their profits, it allows them to have more producer surplus beyond their costs of production, and can charge lower prices and pay higher wages in order to benefit or trickle money down to the consumer - where they would have more consumer surplus. This is exactly what Trump was going for and it is seen with a nice growth in wages and less of an increase in price level. In terms of Keynesian Economics, the Trump administration has used fiscal policy action in order to not only stabilize the economy - but allow it to thrive. By cutting business taxes by 14%, business owners now have more money to invest in new technology and equipment(i.e. Capital goods) and therefore increase long-term potential output, or GDP growth. Increases in investment spending and consumer spending(due to an increase in consumer confidence and a subsequent decrease in taxes) are direct influencers of a country’s GDP and would stimulate more growth in the short-run and potential growth in the long-run.
Many critics have raised the question of how sustainable this economic growth under the Trump administration is. It is true that during the business cycle of the free market, growing economics do see a peak, and then fall into recession where they reach a trough, or a low point, and proceed to run it all over again. But, I believe that since this growth has been steady, the economy will just keep growing and thriving where it’s at until there are significant regulatory measures to slow it down or stop it - which isn’t happening soon. In fact, the Federal Reserve is at a point where it does not want to take any monetary policy action because the economy is growing so steadily. They do not want to conduct open-market operations or anything else to manipulate the target federal funds rate in the short-run because they are at a point where they don’t need to and will “wait and see”(“US Job Growth Surges in April, Beating Expectations with 263,000 Added.”). The labor market in america is also growing at a healthy pace so people will be ready to step up to these new jobs added.
In the end, the Trump Administration’s economic policies have benefited the United States so much because they have been embracing free market capitalism more than any administration since Ronald Reagan in the 1980’s. By cutting many regulations that put pressure on businesses, lowering taxes, and adding jobs, they have been truly making the most of an economic system that has made the most money for the most people out of any other country in the history of the world. The growth has been so great that former president, and big Donald Trump critic, Barack Obama was taking credit for the economic growth since 2016, saying in a speech, “By the time I left office … the economy was growing. And by the way that growth has just kept on going…Right now Republicans are all ‘Look the economy’s so good’, Where do you think that started? When did that start?”(“Obama Swats Trump and the GOP for Taking Credit for Economic Growth.). Quite frankly, after a slow recovery from recession, it’s hard to credit oneself for a surge in consumer and business confidence, after leaving office - not to mention a litany of other records set since 2016. In essence, business is booming in the United States of America, and there are no signs of letting up - thanks to some economic policy that has Made the Economy Great Again.
Works Cited
Breitbart News. “Breitbart News Network.” Breitbart, 6 May 2019, www.breitbart.com/.
Henney, Megan. “US Job Growth Surges in April, Beating Expectations with 263,000 Added.” Fox Business, Fox Business, 3 May 2019, www.foxbusiness.com/economy/april-jobs-report.
JeffCoxCNBCcom. “Trump Has Set Economic Growth on Fire. Here Is How He Did It.” CNBC, CNBC, 7 Sept. 2018, www.cnbc.com/2018/09/07/how-trump-has-set-economic-growth-on-fire.html.
Oprysko, Caitlin. “Obama Swats Trump and the GOP for Taking Credit for Economic Growth.”
POLITICO, 2 Nov. 2018, www.politico.com/story/2018/11/02/obama-trump-economy-republicans-
959046.
“U.S. Bureau of Labor Statistics.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, www.bls.gov/.
President Trump placed tariffs on Chinese imports to help push the US economy to be more self sufficient. When this was done China responded with tariffs on US goods that are of value in China. On April 30, 2019 the US and China were hopeful for a trade deal. “A private chat between China’s leader Liu He and US representatives Seven Mnuchin changed the mood” (Xin). However, “China claimed the US side had kept adding extra demands before accusing Beijing of reneging on what was agreed upon” (Xin). It was hoped these trade talks would end the costly trade war between the two largest economies. “Five days later, the once hopeful negotiations took a sudden turn. US President Donald Trump announced on Twitter on May 5 that the United States would increase tariffs from the 10 percent to 25 percent on US $200 billion of Chinese goods” (Xin). The Chinese officials were not happy and decided to hit back which will make it even more difficult for the two countries to come to an agreement. It remains uncertain what exactly caused this impasse but the global markets when into a tailspin. People who invested money into the stock market lost as investments tumbled. Such investments are used to pay expenses for people who are retired, people who hope to help their children with college expenses and business owners to name a few. This type of financial loss trickles down to impact just about every American. 
The US saw such an economic tragedy during the Great Depression from 1929-1939. “This was the longest and most severe depression ever experienced by the industrialized Western world. Although it originated in the United States the Great Depression caused drastic declines in output, severe unemployment, and acute deflation in a almost every country of the world.” During this time unemployment was at 25% and more than 5000 banks had gone out of business. “Out of work Americans filled long breadlines begged for food, or sold apples on street corners” (Recchiuti). A Chicago Social Worker wrote, “We saw Want and Despair walking the streets, and our friends, sensible,thrifty families reduced to poverty” (Recchiuti). If the trade wars continue at its current pace will the US see another Great Depression that it will not be able to recover from? It’s quite possible.
